Are Online Ads Doing Better Than Expected? Or Just as Bad as We Thought?

The steady drumbeat of bad news from the ad market doesn’t always sound the same: Last week we heard quarterly results from Google (GOOG) that didn’t seem that bad. Tomorrow we’re expecting numbers from Yahoo (YHOO) that will be lousy.

Until then, here are two more conflicting data sets to chew on: A review of financial Web sites estimates that ad revenue will be down by as much as 30 percent for the first three months of 2009. But Gawker Media’s Nick Denton, who has forecast doom for the year and cut his blogging staff accordingly, says revenue is up 10 percent so far.

The good news first: Denton, who was forecasting a 40 percent drop in overall advertising spending last fall, says he’s pleasantly surprised to see good growth in videogame advertising and decent sales for entertainment advertising in the first few weeks of 2009.

He then rushes to point out that consumer electronic ads are weak (obviously), that ads his salesmen have booked so far could still get pulled, that his numbers are preliminary and that perhaps his 10-blog network (soon to be nine) may not be a good market proxy. Etc.

Duly noted. But I’m going to keep highlighting any glimmer of hope I can find at this point. In large part because of reports like the one I received today from Douglas A. McIntyre, the sharp and dour publisher behind financial site 24/7 Wall St.

McIntyre says he’s surveyed multiple financial sites, including portals like Yahoo’s, Microsoft’s (MSFT) MSN and Time Warner’s (TWX) AOL; big sites like CNN Money and Forbes.com; and “medium-sized” sites like his own. His conclusion: Overall ad revenue is down 15 percent to 30 percent this year.

Executive summary: There’s lots of interest in financial news, for obvious reasons. Traffic is up 15 to 25 percent at big sites, and up 35 percent to 50 percent at smaller sites, compared to last year. And page views have grown even more, since sites are getting savvier at keeping you around longer.

The problem: The amount advertisers are willing to pay is dropping–in part because there’s much more traffic, so there’s much greater supply of inventory.

At the big portals, McIntyre says, “many large advertisers are asking for 25 percent to 40 percent more impressions for the same budget that they spent in the same quarter as last year”… and that Google AdSense ads, the fallback position for many sites when they can’t sell space themselves, are worth 20 percent to 30 percent less. Overall, McIntyre says, “CPMs are down as much as 40 percent across the websites we reviewed when compared to the first quarter of last year.”

So there you go: Different data you can use to either forecast more doom or to explain that things may not be so terrible after all. The surprise is that the (relatively) sunny view would come from Nick “doom-mongering” Denton.

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